Facing dark warnings of a historic misstep and widespread unrest, US President Donald Trump on Monday delayed a decision on whether to recognise Jerusalem as the Israeli capital and move the US embassy there.

The White House said Trump would miss a deadline to decide on shifting the embassy from Tel Aviv, after a frantic 48 hours of public warnings from allies and private phone calls between world leaders.

DECISION

The mercurial president has yet to make his final decision, officials said, but is expected to stop short of moving the embassy to Jerusalem outright, a central campaign pledge which has been postponed once already by the new administration.

"The president has been clear on this issue from the get-go: It's not a matter of if, it's a matter of when," said White House spokesman Hogan Gidley, who said a declaration on the move would be made "in the coming days."

"If the status of Jerusalem is changed and another step is taken... that would be a major catastrophe," Turkish Deputy Prime Minister Bekir Bozdag said.

DELAY

"It would completely destroy the fragile peace process in the region, and lead to new conflicts, new disputes and new unrest."

All foreign embassies are located in Tel Aviv with consular representation in Jerusalem, and Trump was theoretically due Monday to decide whether to sign a legal waiver delaying by six months plans to move the US embassy from the Holy City — as successive administrations have done at regular intervals for more than two decades.

"The president is still considering options," a State Department official said when asked about a possible move.

Trump is expected to begrudgingly sign the waiver for a second time at some point this week.

According to diplomats and observers, however, he may also make a speech on Wednesday announcing his support for Israel's claim on Jerusalem as its capital.

The Arab League said it was closely following the matter, with leader Abul Gheit warning any such move would pose a threat "to the stability of the Middle East and the whole world."

PEACE

"It will not serve peace or stability, instead it will nourish fanaticism and violence," he said on Sunday, noting that the League was closely following the issue and would coordinate a joint position with Palestinian and Arab leaders if Trump took the step.

Jordan's Foreign Minister Ayman Safadi also warned that any change to the status of Jerusalem would have "grave consequences", in a phone conversation with US Secretary of State Rex Tillerson on Sunday.

It was crucial, he said, "to preserve the historical and legal status of Jerusalem and refrain from any decision that aims to change that status," the official Petra news agency reported.

In 1995, the US Congress passed the so-called Jerusalem Embassy Act recognising Jerusalem as Israel's capital and stating that the US embassy should be moved there.

But an inbuilt waiver, which allows the president to temporarily postpone the move on grounds of "national security", has been repeatedly invoked by successive US presidents, from Bill Clinton to George W. Bush and Barack Obama, meaning the law has never taken effect.

ARABS

Israel seized the largely-Arab eastern sector of Jerusalem during the 1967 Six-Day War and later annexed it, claims both halves of the city to be its "eternal and undivided capital."

But the Palestinians want the eastern sector as capital of their promised state and fiercely oppose any Israeli attempt to extend sovereignty there.

Several peace plans have come unstuck over debates on whether, and how, to divide sovereignty or oversee the sites holy to Christians, Jews and Muslims.

Palestinian leaders have been lobbying regional leaders to oppose any shift in US policy and the armed Islamist movement Hamas has threatened to launch a new "intifada."

Saeb Erakat, secretary general of the Palestine Liberation Organisation, warned that a change in the US stance on Jerusalem would spell disaster, and would amount to an own goal for US peace efforts in the region.

He said in a statement that Washington would "be disqualifying itself to play any role in any initiative towards achieving a just and lasting peace."

Trump has said he wants to relaunch frozen peace talks between Israel and the Palestinians in search of the "ultimate deal".